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Changing the image of advisers

Mention the words “financial adviser” to someone who has never seen a financial adviser or not seen one in recent years and their immediate reaction is likely to be: What is this person going to try and sell to me and why do I need it today if I&#39ve always got by until now?

But ask someone who has recently received financial advice and they will tell you how beneficial it was and how much they have learnt.

Certainly, from my standpoint, as a student about to re-enter the world of finance, this is how I see the provision of financial advice. From this simple scenario, many questions are raised about how thepublic perceives financial advice. It also begs the questionof what needs to be done toturn the tide so the perception of financial advice weighs strongly in favour of positiveattitudes and not negative ones.

From this scenario I have hit on several key issues that need to be dealt with to convert attitudes and to improve the whole reputation of financial advice. First, the adviser as a person, second, the stigma of selling financial products, third, the benefits to the consumer and fourth, how to get the consumer to share their experience.

Within these issues there are underlying factors which must receive consideration – the recent history of financial advice, the ever increasing number of products and Government legislation.

Like all things, history is ignored at the peril of today&#39s practitioner wanting to strengthen the future of their industry. If we look over the last 20 years, the business of offering advice has experienced huge change both professionally and regulatory and has had its fair share of bad press.

What the industry of financial advice has also seen is a huge change in culture, even over the past few years. When I say change in culture, ultimately what I mean is a distinct move, in part regulatory- driven though also internally moti-vated, away from purely performance-driven selling to make a “fast buck” to the provisionof well structured, well thought out, financial advice. This not only leads to one sale but also repeat business . The realityis that a sound client basecould create a business cycle for life, that will bring cont-inual recommendations, a respected reputation and, most important, an acknowledged level of professional trust.

How to achieve this? To begin with, give the consumer the feeling of some control in the product-buying process so they know they have played some part in selecting what they are going to walk out of the shop with. In this sense, relate it to buying a new car. People want to be advised in the dealership but also want to see for themselves different colours, feel the difference in seat fabric, experience the performance.

Just because a financialproduct cannot physically be touched, it is not to say the features of the products cannot be placed on, say, a dedicated computer system for the client to look at first to then give them the power to question the adviser even before the full advisory process has taken place.

Some people may be willing to trust the adviser straight off but just the knowledge that, if the consumer wanted to, they could look at the huge variety of differing products in one source without having to ask would be reassuring to the somewhat sceptical man on the street before receiving the full advisory service.

General perception also states that so long as commission-based earnings exist, then the IFA&#39s image of days past will live on. The creation of a salary pool may go some way to change this. The idea I would propose is that all firms wanting to sell through IFAs would have to contribute financially to the pool.

A salary system would then come off the back of this, based on an adviser&#39s experience, combined with how many clients the adviser sees each month. An annual bonus based on general performance would also be awarded from the pool. The aim is this system would not only help to change the clients&#39 belief that they are being sold the product with the biggest commission but would also make financial advising attractive to a more flexible workforce. The classic example would be ofparents wanting to work limited and variable hours to spend time with their family.

This would give IFAs the image of being forward looking and approachable, both as a profession to work in and to receive advice.

Technology plays a bigpart in society these days and there are an increasing number of people willing to buy over the internet.

For financial advice, regulatory restrictions would limit any actual advice being given (currently) over the internet. But with an increasing demandfor financial advice, technology should be harnessed, say, through a website or onsite terminal in IFA outlets to assist and complement the adviser.

The terminal would work by asking a series of basic questions of the client – age, housing status, marital status, health, etc. Clients would use a simple, user-friendly touchscreen system which comes up with products to consider and a clear, simple explanation of why they should consider such products.

The next stage would offer a range of different firms&#39 products and highlight what you get for your money. The client would get an individual reference and personal printout and could then discuss with an adviser what product would best suit.

The client would be armed with at least a limited degree of knowledge rather than thinking this sale is just concerned with the adviser&#39s own commission mark-up. The psychology of getting the manin the street to believe they really are playing a very valuable role in planning their future is all important.

Regulation cannot be ignored in this article. Lobbying must be encouraged to raise awareness off the damage that politicians&#39 obsession with over-regulation can have.

The complete lack of trust that politicians in general have in financial practitioners seems increasingly frustrating.

In no way am I sayingthat regulation should not exist but there is a point at which over-regulation is a hindrance that creates a negative rather than positive protective image of the industry.

In historic cases of misselling of products, how much would all the regulation oftoday really prevent it happ-ening again?

My personal belief is that anyone in any position of resp-onsibility could, if they really wanted to, commit a financial crime – regulations or not.

We must also look at products which have received Government attention. Misselling of pensions occurred in many circumstances due to the confusing nature and lack of clarity with which the Government of the day announced it was changing the pension rules.

The same must apply to Individual Savings Account and the initial reluctance with which the public took up this tax-free saving scheme in comparison with the huge success of the Pep. Today, the questions are is it a mini or maxi, how much can you invest and in what exactly?

The final issue is one ofthe name “independent financial adviser”.

Talk of finance frightens many people. Remember that sharp intake a breath every time the credit card bill arrives? So seeing an IFA creates primarily the harsh and daunting thought of the finance man and second the undeniable image that still lingers today of pressured sales.

Attorneys changed their name to solicitors so why cannot IFAs lose this harsh title to something which reminds people less of the unfair reputation that still goes before them? As to what term could replace IFA, that is a discussion that could run and run.

One suggestion that I would put forward is the more friendly term of money planner. If a bank is now a retail financial services outlet, can financial advisers really afford to stand still and keep their old name and reputation as the rest of the world gets to grips with the 21st Century?

Ultimately though, the best chance of success in the future is to get in the schools and explain to the new generation and soon to be school leavers the importance, value and professionalism required from financial advice to see solid growth in this new millennium. Image can be everything. Nurture it well at this stage and the rest will take care of itself.

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